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How We Save (and Spend) Now

Americans have suddenly become savers – but still spend in surprising ways. We look at the new profile of how we save, spend and splurge.

Shoppers stroll through Sawgrass Mills Mall during the first day of the back-to-school sales tax holiday, Aug. 13, 2010 in Sunrise, Fla. (AP)

American saving and spending are all over the place these days.

In Biwabik, Minnesota, Alice Splawn and her husband lost two thirds of their income when he lost his job.  Now she sews her own clothes and hunts deer for dinner. Meanwhile, sales at pricey Starbucks, Apple and Mercedes Benz are rocking.

Overall, Americans are definitely saving more – from necessity or fear.  But there is glossy spending out there, too – and sometimes from the same families trying to save. 

It’s a new, mixed-up world of consumption and constraint — the new saving and spending in America.

-Tom Ashbrook

Guests:

Devin Leonard, staff writer for Bloomberg Businessweek. His recent cover story for Businessweek is The New Abnormal.

Marshal Cohen, chief industry analyst for the NPD Group. He’s author of “Buy Me! New Ways to Get Customers to Choose Your Product and Ignore the Rest.”

Christine Moorman, professor of business administration at Duke University.

John Quelch, professor of business administration at Harvard University. Watch a video of Quelch talking about consumer behavior in this recession.

Please follow our community rules when engaging in comment discussion on this site.
  • Joshua Hendrickson

    My family lives below the poverty line (under $20,000 a year). We have no way of saving anything that comes our way. We get unemployment (about $100 a week) and food stamps (variable, from adequate to ridiculously inadequate), no welfare or other govt. assistance. Everything gets spent and that right quick. I’d love to know how anybody in our position is supposed to save money.

  • John

    I’d love to save but will likely be paying off student loans into my late forties. I assume I’ll never own a home, but being penniless in retirement is more of a worry.

  • http://ncpr.org stillin

    Savings? Are you kidding? This country is broke for many working people, myself one. With two degrees, a good solid teaching position, and 3 kids, and no child support. There will not be savings. I will be paying my student loans into my grave. It is completely unacceptable that a country with this much money, ( some have ) and this much potential, has so many suffering regular people. It is UNACCEPTABLE. What you will see is masses leaving the country upon retirement. I am not broke from consuming, as I buy very. very little. I bought a beautiful cheap old home I love. I am broke because I am student loaned and taxed to death, and owed 100,000 ( you read that right) in BACK CHILD SUPPORT.

  • Chris

    It seems everytime I get anything into savings, it comes right out again. New Water Heater, car repair, Dr’s appt., always something. My husbands pay was cut last year & hasn’t been restored and I am working after a year of unemployment, but at much less pay. Same expenses still there & going up, up, UP! At least we are both still working (fIngers crossed!!), but it is getting harder & harder to make end meet. Unemployment was helpful, but certainly not enough to become lazy like some try to say. It kept food on our table & the roof over our heads until I found work.

  • Mark

    We are absolutely NOT saving. Just because the media, or some economists, say we’re saving more does not make it so. We’re at a point in this country where we’d have to live in the woods, never get sick, walk everywhere we go, and forgo basic necessities for our children in order to save.

    Rather, the middle class, for the most part, in order to provide for our families in very menial ways, has to either not do so, in many cases, or use revolving debt.

    THE DECK IS STACKED AGAINST EVERY ONE OF US. THOSE WHOM WRITE THE RULES OF OUR ECONOMY DO SO NOT FOR US MIDDLE CLASS FOLKS.

    As a result, our country is going down the tubes. How depressing.

  • John

    It is obviously our fault that wages have been in decline for decades.

  • Mark

    Kathryn, I find your comment repugnant and heartless, and if I could, I would delete it.

  • jim

    Since early 2008, splurging means buying a cup of coffee at Starbucks. At $1.62 a day, that’s $590 per year. Two cups is nearly $1,200.

  • Chris

    Wow Kathryn, you are brutal! I hope you are never in the shoes of some who have had their world upended. You will be in for a rude awakening.

    People make choices all the time and try to follow the American Dream: go to college & work hard and that doesn’t cut it anymore. Our country is in a downward trend and the majority of the middle-class folks are being squeezed for every drop of blood they have while others have excess to work with for no reasonable explanation. Being well-off doens’t make you a better person and more deserving. I don’t want it all, I just want enough to be confortable and have a good life. That dream is flying away.

  • brandstad

    This is a grat time for personal responsability.

    Our governemnt should stop rewarding bad behavior, even though they have favored bad corporate behaviour the most, they will surely try throwing some crumbs to us common folks even though they could do more by doing less…. STOP SPENDING our money and putting us into a burdonsum debt

  • John

    Fortunately I don’t like coffee, so I’m going to join the self-righteous and blame you for your lack of prosperity.

  • Matt

    It is becoming next to impossible to save a decent amount of money on a middle class salary. This country is the most unequal in economic terms in it’s history (even more than 1928). In fact, America is the most unequal industrialized nation in the world.

    Every one of us should read Bruce Judsen’s It Could Happen Here

  • Mark

    brandstad – while ever growing government spending and waste certainly plays a part, a VAST majority of the problem the middle class has with having the capacity to save has more to do with the rather deliberate decline/stagnation in middle class wages vs. rising costs of everything else.

    The decline of organized labor in this country (Google “Reagan fires striking airline workers”) has resulted in the decline in middle class wage gains.

  • Kathryn

    Repugnant and heartless? I feel the attitude of many commenters is self-defeating and self-pitying. Essentially all I said was that people put themselves in bad places financially and then blame everyone else (the economy). You relied on a terrible system instead of thinking for yourself. If you are so automatically defensive then you have a bad attitude and feel I am targeting you. I am not targeting the people but the attitude.

    I feel that the government should not bail out but instead teach better strategies since people aren’t willing to go out and learn for themselves without first making massive mistakes. There are plenty of resources out there to prevent these things from happening, sometimes you make bad mistakes and you have to deal with the consequences for years. Just because half the country did the same thing doesn’t mean it was ever okay.

  • Paul

    The “mixed-up world of consumption and constraint” part of the intro is interesting. But should we expect it to be any different? For decades now, most Americans have been spending according to sheer impulse or advertising-pumped desire, with no thought for consequences. It takes time to re-learn judgment (or learn it in the first place for younger Americans). Recognizing what we really need is not easy when we are in the habit of buying whatever caches our eye and going into instant debt for it against future income. Now that present income, let alone future income, is in doubt, we are learning to think and plan again.

  • Rob

    While I am understand that people may encounter difficulties (e.g. unemployment) at various stages of our lives, there is no excuse for having no savings, particularly while a person is working. My advice is to start taking responsbility for our own financial decisions and stop blaming others (e.g Government, high income earners, etc..). I know many of you are probably going through difficult times, but you can still develope the discipline of saving in small ways. As previously noted, a person can save close to $1,000 per year by forgoing Starbucks and brewing our own coffee (same for forgoing fast food, such as McDonalds). When you are working, make it a habit to put at least 5-10% of your pay into your 401Ks or IRA and also try to match these savings to develop an emergency fund. How do Chinese (and other Asian nations) have far greater savings rates than Americans with far lower per capita incomes?

  • Mark in Minneapolis

    I saved money in the boom years (2003-2008) while all my friends bought houses and cars … because I did some very unamerican things: I rented a home, I bought an inexpensive used car, and I lived below my means. Times are tough for some people, but they can always look at how much they make an cut the amount they spend accordingly.

  • Ellen Dibble

    I thought the administration is telling us the ones who need to spend are the people in countries where out balance of trade is off. We need to export. So (a) we need to buy American products, and (b) we need to produce things that CHINESE people want to buy FROM US. Right now, China sells; we buy (because it’s cheap); and China loans us money to buy that stuff.
    We need to produce the sort of things India, China, et al. would import. What would that be? iPads by the gazillion?
    I don’t feel bad about not buying things so long as I’m producing things. I don’t think we should rely on Americans to keep making rash expenditures.

  • toby jones

    I am saving more than ever before. Most of my savings would be in the non-traditional category. I am investing in Gold, Silver, Lead, and long term food storage. I am spending money on things that have a longer lifespan than a night out to dinner and a show.

  • Ellen Dibble

    Spending keeps being represented as Old Economy (cruises, costly vehicles).
    It seems to me there is a sea change in which we no longer see Success as contributing more than my neighbors to global warming.
    We’re waiting for choices that meet the planet’s needs.

  • Alex

    The government helps borrowers, and not savers. There is nothing for savers in this country (other than maybe some IRS regulated funds). When the times are bad the government reduces the interest rates to zero, which ensures 0% return on your safe investments. Meanwhile, rising energy and food prices gobble up your savings. The stock market is volatile so it is dangerous for an average person to keep his/her money there. Bad all around.

    On the other hand, if instead of savings you have, or want, debt, the government is right there for you. Interest rates are lowered for you to borrow. Tax credits of various kind are designed to get you to borrow, as well. If you can’t pay there are various assistance programs. The government bends over backwards to save you from foreclosure and leans on banks to rewrite mortgage loans for you. Finally, as a last resort, there is bankruptcy law that can expunge most of your personal liability.

  • Jane Lego

    The money I save by using coupons while buying groceries and other necessities I “splurge” by buying school supplies for various agencies in Ham pron Roads where I live. I am 80+ and live on Social Security and city retirement–so I am not wealthy, but understand that there are people who do not have the wherewithal to get such items for the family– “Angel Tree” gets the January sale clothes (store away for a year so that some youngster will have a new jacket and shirt ‘under the tree”. Incidentally, I will not buy at Walmart, and carefully vetted bog box stores for their human resource policies.

  • BHA

    Some people without money buy things they want (whether needed or not) to make themselves feel better. Similar to an overweight person who eats because they are depressed about not being able to lose weight.

    In both cases, the logic processes aren’t working properly.

  • Margaret Kimball

    I want to echo what Rae just said on air about a new kind of consumer/spending in terms of social responsibility. I also think there might be a generational shift happening. My father (age 50) said that growing up, the goal was to buy the biggest house he could afford. After two divorces and several moves and mortgages, his goals are shifting (he wants a one-bedroom apartment, with no lawn). I think this represents change in the American Dream. Another example was printed in the NY Times recently (http://www.nytimes.com/2010/08/08/business/08consume.html?pagewanted=all), where a family got rid of debt and moved to a small apartment, happily. Among my friends, we’re not interested in big ( and the debt and responsibility that goes with it); we’re interested in quality of life, happiness and flexibility.

  • Nick

    We don’t need half the “stuff” consumers purchase + accumulate.

    I’m not swayed by marketing: no iphone or blackberry; no ipod; no HD TV; no car.

  • Francine

    I got into this new saving / spending pattern early, having had my prosperity wiped out by illness about ten years ago. I simply had to learn to spend less, since my income went down by 80%, and my savings and assets were quickly exhausted. I’ve given up my house, my car, my gym membership, my health insurance, and a whole lot more.

    At the same time, I’ve learned to live well, even affording myself a little luxury from time to time. For me this meant clearly identifying the things where quality mattered, and the pleasures that really lifted my spirits for the long haul.

    Richly simple is my operative motto.

  • Ellen Dibble

    Beyond consumption, there is a basic human need to “provide, provide” (Robert Frost?), whereby one pauses only to think what can I build or buy that will make the next crisis better?
    In the last decade, because of what Alex points out (the banks dying to loan to us, the government dying to have consumers buy, buy, to please the campaign contributors, corporate type) — we answered that need by purchasing.
    There are other alternatives, more creative ways than wandering through a mall.
    I am at an age where I don’t need much, and I still spin my wheels thinking what would I need if I didn’t have it already, something like that. So I’ll plan out a wardrobe or furnishings, have fun doing it, and then buy a soup and sandwich downtown for purposes of “shopping trip” (socializing). I think we need to need. We need to be planning out what to get next, even if we don’t act on it. Before 2008, maybe others like me saw that a certain bubble was about to burst. It’s hard to be rational about that. If you’re employed it’s one thing; if you’re a business owner you do something else.

  • BHA

    Consumer durables: They have to be DURABLE. The expected lifetime of a major appliance purchased today is 8-10 years.

    My 28 Y/O dryer still works. So does the 23 Y/O GE dishwasher. So does the 21 Y/O refrigerator. The Sharp microwave we got for a wedding present 20 years ago lasted 15 years. Its replacement 4 years. The GE microwave I bought in March 2009 died in April 2010.

    I’m not replacing any of my ‘durables’ until they die and I’m not buying another microwave.

  • John Ranta

    I’m astounded by how much money the typical American has been willing to throw away on such a lousy investment – i.e. a new car. We all know that a new car rapidly decreases in value, from the day it leaves the lot. The economically intelligent thing to do, therefore, would be to buy the cheapest car possible, so as to minimize the ensuing loss of wealth, and then keep it as long as possible. This is not how we’ve behaved. Americans over the past 3-4 decades have thrown ever more money away on new cars. In 1970, the average American salary was $7,000, and the average new car price was $3,900. Today the average American salary is about $31,000, and the average sales price of a new car is over $30,000. This makes no sense! Given the many ways that automobiles are wasteful – of energy, of materials, of space – maybe this new spending trend will lead us to become wiser when it comes to buying automobiles…JR

  • leigh webster

    When Apple comes to Detroit… I say when Apple and others build in Detroit.

  • Sue Leroux

    The innovation in durable goods is their energy efficiency! Keeping a 25 year old washer/dryer is really dumb, bad for the environment and the economy. This applies to many other durables.

  • Jeremy

    Frugality was something always taught to me while growing up in the middle class. I wore hand-me-down clothes from my brothers (and even my sister).

    Saving and learning to live within your means should not be seen as a “trend” but as a way of living.

    Luxury items and discretionary spending are just that and should not be confused with survival.

  • John Ranta

    On the other hand…there’s a serious problem with our neo-frugality. Which is unemployment. When the middle class spends frenetically (as it did from 2003 through 2008), it creates jobs. Unemployment during those years was 5% or less. When the middle class cuts back spending and saves, as it is doing now, jobs disappear and unemployment rises to 10% (and remains there, stubbornly).

    Economists estimate that 70% of our economy is driven by consumer spending. If we all become frugal – sewing our own clothes, eating out less and shopping in thrift stores, etc – will unemployment continue to rise? As we cut back significantly on our consumption habits, who (or what) will create new jobs for the millions who are out of work? JR

  • BHA

    I would agree Sue, except that If I have to spend a $1,000 now to replace an appliance and $1,200 again in 5-8 years, it is NOT dumb to keep the one I have.

    1) We don’t use the dry cycle on the dishwasher, they dry fine by themselves. to do otherwise is wasteful.

    2) The dryer is only used on low heat. Plus there is NOTHING to an electric dryer – a resistance heating element and a motor to turn the drum. Tough to make it use less energy. We also line dry a lot of things.

    3) The washer (which matched the dryer) was replaced 4 years ago with a very efficient front loader. Less water used to wash and less water left in the clothes.

    I do think about the potential for more energy efficiency in a new dishwasher or refrigerator. I would even pay a premium if I KNEW it would last AT LEAST 15 years. Throwing a major appliance in the dump every 8 years isn’t very environmentally friendly either.

  • BHA

    Kathryn: “teach better strategies since people aren’t willing to go out and learn for themselves without first making massive mistakes.”

    Which is why I think no kid should be able to graduate high school without taking a course in personal finance. Sadly, at least here, they don’t even have the choice to take such a class.

    Many parents have no idea how to properly manage their finances or even balance a checkbook. They have dug themselves into a financial hole. How are they to teach the kids at home?

  • BHA

    Ellen: “China, et al. would import. What would that be? iPads by the gazillion?”

    No need, the IPads are made in China, just like most (all??) other Apple products.

  • Ellen Dibble

    BHA, I think modern products are designed to be discarded. The corporations don’t worry about the size and toxicity of our dumps. If you buy a cell phone or other gadget, it is probably designed to last a couple of years before they plan another campaign to sell you something “better.” If they thought that people would refrain from buying at all until they stopped using such tactics, then we might have products built to last, to continue to be current.
    Remember when phones would last 50 years, or 100 years?
    A real clear example of this is clothing, where if at all possible to sell me a bright turquoise blouse that “goes with” nothing but white, they will do so. You pay top price for the dark grays, if you can find it, because it is dependable, lasting.
    Job-wise, the push should be to get OTHER COUNTRIES to do the buying. We need to have the new consumer types at phone banks in the Philippines or Mumbai looking to purchase American made products.
    For Americans to buy them only solves a tiny part of the problem. It’s what we can SELL, not what we can buy, that determines our success as a country.

  • Ellen Dibble

    Well, BHA, at least we keep the profits for iPADs in the USA? Maybe? This is getting pretty deep.

  • Samantha

    I have a question for my wise fellow listeners/commentators.

    I was young and stupid and now, long long years later, still paying for my stupidity. Not blaming anyone, except myself.

    My ex and I bought a timeshare that he put on my name ONLY when I was younger. Now, 10 years later, it is all paid off – the monthly payments accrued on my credit card, which accumulated to about 14k over the years, which I have paid off 3 years ago, living on bread and water and working full time + part time job, but now I cannot unload the timeshare on anyone, because as everyone knows – its just a bad thing. The resort that holds the timeshare says that I cannot just ‘give it back’ and the only way out is to find a buyer. I cannot find a buyer, because its in a bad time interval and just isn’t worth much.

    So, do I continue to fork off 800 – 900/year in maintenance fees, or stop paying the fees and risk a potential of ruining my (otherwise stellar) credit score/history? The timeshare hasn’t been used since my ex used it last, about 8 years ago.

    Thank you

  • gala

    To the caller who took his children out of private school to save for their college. I wouldn’t have done that. Recently I was anxious about starting a college saving plan for my 8 month old and spoke to a co-worker about it and his advice made a lot of sense, at least to me. He advised to spend the money, if I have any, on the kid’s private school and after-school activities rather than on college savings plan, because if the kid does well in school and graduates with good grades, he will be able to get a scholarship for college and at last, borrow in student loans. He also advised to save as much as possible for my retirement. Because no one is going to give you a loan to ‘retire on’ while the kid will be able to get loans to get a college degree.

    Also, I believe in parental involvement into kid’s education. Doing homework with them, being involved in their interests, encouraging them, supporting them, spending time with them, actually knowing your kids and taking responsibility for what kind of people they are turning out to be. Not saying that the caller isn’t doing that, but I believe that its a personal trade off between a) working long hours to pay for kid’s education, thus spending less time with him/her/them and b) making less money, but spending more quality time with your children and having the time to be involved with your children.

    Thank you

  • gala

    But, on the subject of savings.

    I haven’t learned good savings strategies from my parents, because when we came into this country 14 years ago, we lived in near poverty. Then, when my father started making A LOT of money in the tech boom in the late 90s in NYC, we went all out and splurged and lived above our means.

    Growing up in Russia, where I had 1 pair of jeans, 1 hat, 1 coat (that were passed down to me); going to “able to buy pretty much anything you wish”, got me in trouble and it has been a LOOOONG road to learning better finance and money management skills.

    I wish I had learned to save early on and wouldn’t be in the place where I am now, but I do feel better that I am able to learn from my mistakes and make progress and save and make better educated decisions about my finances now. So, just a word of encouragement to everyone out there who is trying to keep their head above water and do the right thing. Its possible, just keep working hard at it and it will pay off.

    Thank you

  • Rob

    Here is a quick response to Samantha’s question regarding time shares.

    As you indicated, time shares are horrible “investments” and should really be thought of as prepaid hotel or rental fees (that go in perpetuity).

    I would have an attorney look at your specific time share agreement to see if is ironclad or there are potential outs. If there are significant differences between sales/marketing materials and your actual time share property, you might have a case against this company. I have also heard of time share agreements where the cancellation policy conficts with state law. Another avenue to explore could be legal action against your ex for a portion of the maintenance and other fees to the extent this was a mutual decision, which can probably be proved by showing airline receipts, etc… that show you both used this property).

    I would also beware of these “services” and websites that charge you a large upfront fee and offer to sell your timeshare. As you noted, the time share resale market has far more sellers than buyers at the moment (and because people are now more aware that these are generally bad products). I would also look at the your agreement to see whether there are any terms that conflict with state law. I have heard many of these agreements contain cancellation provisions that are inconsistent with state law, which may help your case

    On another note, I believe time share agreements are generally considered unsecured debt from the standpoint of most state bankruptcy laws along with credit card debt (e.g. attorneys should correct me if I am wrong here), but you definitely need to consult with an attorney if bankruptcy. This probably will not help to you as you indicated you have strong credit rating.

    Good luck.

  • Rachel

    Agree – we should require finance management in school. I wish so badly I’d had the opportunity to take classes like that when I was in high school, but they weren’t offered. It is only through a series of errors that I’ve learned to manage money – probably like most people. Buying a condo also taught me a lot as did my loan originator – who graciously took a large amount of time educating me on money and credit.

  • Michele R.

    Pay yourself first. If you are employed or receive benefits: pay yourself first. Always put something in savings before you pay your bills. I have done this for years and it has served me well.

  • JR

    Samantha, how about donating the time share to a non-profit? They might love to have it as an item to auction it off in a fund-raiser, and you could deduct the book value as a tax deduction. Just a thought…

  • Jim in Omaha

    The average (as opposed to median) U.S. household has net assets of over $500,000. If yours doesn’t you should be asking where your fair share is, why, and what can be done about it.

  • Grady Lee Howard

    Jim: You sound like a “social-list”. How did you come to this “averaging” conclusion? Can we get there from here?
    beretco’op@hotmail.com
    I’m recruiting sharp thinkers for my documentary film.
    Look forward to hearing from you…..

  • Jim

    when i first came to this country in 1980, my parents work in low-paying jobs. but we simply refuse to think we CANNOT save. of course, my parents had jobs that many americans refuse to touch. my mother was a seamstress working on a 6am-6pm shift. we were living slightly above poverty with take home pay of less than $9600 per year. our rent ate up half of the pay. Yet, we are quite happy and we DID save. we were glad to save since we need to tap on the rainy day fund for another big recession in the early 90s. so, i don’t understand why americans believe they cannot save. not accepting odd and low paying jobs is a different story. remember, if you live in the US it is all about SURVIVAL. not everyone will turn out to be a filthy rich suburbanite.

  • Rob

    In the spirit of full disclosure, the mean and median net assets that I believe Jim in Omaha makes reference to are latest census data

    http://www.census.gov/compendia/statab/2010/tables/10s0705.pdf.

    In response to the comment…….”the average (as opposed to median) U.S. household has net assets of over $500,000. If yours doesn’t you should be asking where your fair share is, why, and what can be done about it”, m yfair share of another person’s savings/ wealth is $0 and his/her fair share my net wealth is $0.

    Lets consider two hyopthetic American couple that are 65 years old: the Thrifts and the Spendthrifts. After adjusting for inflation, both couples had a combined annual income of $60,000 while they were working. The Thrifts lived below their means to the point of being cheap, but managed to save $15,000 per year that was invested in the S&P 500 (with 50% moving into bonds in equal increments over the past 10 years as they approached retirement, whereas the Spendthrifts embraced the philosophy of “live for today” and saved nothing.

    Assuming an average annual return of 5% (after inflation), the Thrifts would have accumulated savings in excess of $1 million, whereas the Spendthrifts would have nothing but credit card debt. Based on Jim in Omaha’s logic, the Spendtrifts are entitled to their “fair share” of the Thrifts’ assets. I say the Thrifts are entitled to tell the Spendthrifts to eat dog food in their golden years!!!

  • Rob

    Ok, I got excited, maybe not telling them to eat dog food.., but you can get the point of how wealth can be accumulated slowly for the average person.

  • Bush’s fault

    If you can hover on this forum day after day and offer articulate comments, however irrelevant, unless you’re disabled, you can work. If you can work, you may find you don’t need food stamps, and who knows…you may actually begin to save some money.

  • Susan Snow

    While we are not wealthy, we are not poor either. This is because we have always lived within our means and chose to have a single child rather than many. Having that single child meant we could spend more on her education, where dollars really count.

    A long time ago, I realized that if I wanted to save money and stay within my household allowance, eating vegetarian was the way to go. And, especially when my husband is out of town, I eat beans and whole grains, as well as fresh vegetables and fresh fruit –no or few processed foods. By avoiding meat, pre-packaged processed foods including carry-outs, I can reduce the amount of genetically modified ingredients and toxic agrichemical pesticides that damage my health, AND saved money.

    Beans and whole grains, which I chose to eat are certified organic, which cost more. But, I don’t throw money at pharmaceuticals because organic food is healthier than genetically modified food. Perhaps, it balances out. Also changing my lifestyle to exercising more, means we are not spending as much needlessly. And while this philosophy may be elitist, it does help me save money.

    Recently, my husband announced that we were dropping all cable channels except public television and the C-Span channels which are in the basic package from Cox. This will save us $400/year. We are getting better quality for our dollar.

  • Becca Snow

    While we are not wealthy, we are not poor either. This is because we have always lived within our means and chose to have a single child rather than many. Having that single child meant we could spend more on her education, where dollars really count.

    A long time ago, I realized that if I wanted to save money and stay within my household allowance, eating vegetarian was the way to go. And, especially when my husband is out of town, I eat beans and whole grains, as well as fresh vegetables and fresh fruit –no or few processed foods. By avoiding meat, pre-packaged processed foods including carry-outs, I can reduce the amount of genetically modified ingredients and toxic agrichemical pesticides that damage my health, AND saved money.

    Beans and whole grains, which I chose to eat are certified organic, which cost more. But, I don’t throw money at pharmaceuticals because organic food is healthier than genetically modified food. Perhaps, it balances out. Also changing my lifestyle to exercising more, means we are not spending as much needlessly. And while this philosophy may be elitist, it does help me save money.

    Recently, my husband announced that we were dropping all cable channels except public television and the C-Span channels which are in the basic package from Cox. This will save us $400/year. We are getting better quality for our dollar.

  • http://dah.n3.net David Harris

    Interesting Interesting a radio show about people saving. Talk about the percentage increase in the number of people saving. But no talk about WHERE PEOPLE ARE SAVING THEIR MONEY. The Most Interesting thing about the show , they never once talked about how much banks are paying in interest on those precious savings accounts? There was more talk about consumption.

  • T. Voyd Sherrell

    Memorial Day, For Sale

    It came in the mail,
    A store-wide sale

    On this Memorial Day
    Reminding of less to pay,
    Some gave all
    But not at the mall,
    Freedom is not free
    Buy one get one free,
    Draped in a flag
    Would you like a bag?
    Forget about the war
    Consumerism the whore

    It came in the mail
    A store-wide sale

    T. Voyd

    Copyright 2010

  • Pan

    Excellent show today, Tom.

    What I found most fascinating in the show today was the fact that Consumers were saving seemed to be a mere routine course of matter.

    Instead, the piece de resistance jumped out to be the state of panic being experienced by the marketing analysts, and advertisers.

    “What is the American consumer doing?” “Why are they doing it?” “How can we predict this?” “Is this permanent?” “Where are the trends going?”

    As noted by your guest – “…this new habit, crushes the middlemen”.

    Perhaps it is not so surprising to find out that profit maximization bubbles up in any discussion of the capitalist economy.

    Even so, a realization like this and hard self-look at one’s own spending habits and consumerist psyche; questioning the luxuries, and even the inane run for coffee, may just turn out to be an equally insightful discourse.

  • Samantha

    Thank you Rob and JR.

    I looked into donating it already and because it is in Canada, charities here in the States can’t accept it.
    I haven’t found such charity in Canada.

    I will contact a lawyer in Canada to go over the agreement and possible ‘abandonment’ of the timeshare and what consequences that might have. The only problem is that the maintenance fees are collected by the US company, so that’s why I am afraid of my credit being ruined.

    My ex is long gone and I wouldn’t even know how to find him at this point. I consider it a blessing. And quiet frankly, I wouldn’t deal with him ever again, for ANY reason, including taking him to court for this. He is partly responsible, but I know that its my fault for being so gullible and stupid and allowing for this to happen. So, I take the responsibility of dealing with this mess myself.

    Thank you very much for all your help and advice.
    I just hope that there is a way out, other than continue to pay for it for years and years to come.

  • Jim in Omaha

    To Rob: My comment was not meant to imply that one person is entitled to another’s personal savings. My point simply is, if you consider yourself an “average” American, you would have over half a million in savings, and if you don’t, you should ask “why not?”. It could be because you were like your spendthrift example, but I believe it is more likely to be that your income, if you have a job, has not kept up to the point that significant savings is reasonably possible, or your main asset, your home, is now worth significantly less than when you bought it, or your other assets like stocks have taken a huge hit. I do think it would probably be easier for the average American to save if they only had to pay taxes at a lower rate like a billion-dollar-a-year hedge fund manager instead of a working stiff.

  • http://www.beccar.wordpress.com Eugenia Renskoff

    Hi, Because of the consequences of foreclosure and mortgage fraud/predatory lending, I have not been able to buy anything for years except at The Salvation Army. I save whatever pennies, nickels and dimes I can. Eugenia Renskoff

  • Rob

    To Jim in Omaha, Thank you for clarifying your comments. I can agree that our nation needs to seek creative (rather than redistributive) ways to close the earnings gap, but Americans also need to save more and consume less and take responsibility for own financial affairs.

    I also agree with earlier comments that the US needs to make personal financial planning part of a basic high school education. Although some people use words that unnecessarily complicate personal finance, most of these concepts are fairly basic. Here is a link to a website from a radio show that I came across about 15 years ago after listening to Yankee game.
    The education and recommended reading sections are excellent information sources to help people become their own financial planner. Educate yourselves. Do not become shark bait for some unscrupulous mortgage broker, salesman, etc…

    http://www.bobbrinker.com/index.asp

  • Rob

    Although this comment is “Off Point”, I presume the last portion of my pevious comment that references listening to Yankee games will not win over too many of the New England based listeners here.

  • JR

    Rob, we should question the “chicken and egg” of wealth distribution. When does “redistribution” of wealth occur? What is the most effective distribution of wealth? Our economy has to work for all of us, and enable the vast majority of Americans to live well and prosper. I think it’s fair to say that this is not the case today.

    We’ve implemented tax policies in this country over the last few decades that have led to a stagnation of working class and middle class incomes, and a significant redistribution of wealth to the richest 2%. Is this healthy for America?

    There has been no real increase in working & middle class incomes since the 1980s, despite the fact that worker productivity has increased significantly over this time. The shareholders and executives of corporations have been pocketing all of these productivity increases. I think these gains should have been shared more equally.

    I’d like to see a more progressive tax policy, that corrects this imbalance of wealth distribution. This is not only fair but salutatory. To assume that taxing income once it’s in wealthy families’ trust funds and investment accounts is “redistributive” ignores how the wealth ended up in their hands in the first place. A little re-redistribution is the best policy to ensure an economy that works for all of us, not just the top 2%. We should establish a tax system that ensures that all Americans realize the productivity and growth gains of the past 30 years, not just the richest 2%.

  • http://www.isagoodies.com mark

    They said that 70% of our economy is driven by consumers, but it seems that now days, less people are expending, therefore the economy is so slow.

  • Jim in Omaha

    Being a household of self-employed people without any employer financed pension in our future, my wife and I are definitely savers. However, I would note that if our consumer-based economy depended on people like us the GDP would be a lot lower. Which brings me to the point that our current measure of a healthy economy, based upon total GDP, is a truly flawed standard. Any standard that doesn’t account for the way the economy’s production is distributed is, by definition, inaccurate.

  • http://silver-shoppe.com http://silver-shoppe.com

    It seems everytime I get anything into savings, it comes right out again. Its not easy to save now days. thins are hard.

  • Richard

    The reason Kathryn’s words provoked the response they did is that her observations are indisputably correct.

    Every morning, when I look into the mirror, I see the one and only person who has been or ever will be responsible for the choices I make and for the consequences they entail. Think of all the things you buy and the better uses to which the money so spent might have been appplied.

    I know that about which I speak, as I have worked in the financial services industry since 1993 and have seen how people with little in the way of formal education and with no “family money” with which to begin amassed fortunes by ignoring advertsing, skipping all the do-dads [big screen TV's, jewelery, trips to Hawai'i they couldn't afford, cars they couldn't afford, premium cable TV... you know...all of the "consumer junk"] and instead invested small, indeed very small, amounts of money consistenly over time. These are the people who, instead of buying iPhone after iPhone and iPad after iPad, bought Apple stock. A $7,000 investment in Apple made in February 2003 is worth $500,000 today.

    Some people do suffer under insurmountable economic adversity, but most fritter away what could be a small fortune by spending on things they do not need and that will soon be in a land fill. You don’t lose $1 million simply by misplacing it. You lose it $50 at a time.

    I recall having once read on a fortune cookie, “True words are seldome pleasing and pleasing words are seldom true”.

    Your future is in your hand and it always was.

  • Mister Fat Man

    I’m just now listening to the podcast of this show. Who are these people who buy new cars every two years and can afford iPhones and vacations after they lose their homes?

    In my world not much has changed. I’m still living on a budget and driving a 15-year old car (which I bought used). I bought less house than I could afford and have watched its value drop. My parents have little or no savings and will soon be needing expensive medical care.

    After several years without health insurance, I was able to find a high-deductible plan with a HSA. After years of not contributing to my retirement, I’m finally able to do so. I am lucky to have a job. I live on $2200/mo and really haven’t much to complain about, yet when I hear pundits talk about how we need to buy more in order to stimulate the economy, I am shocked and saddened.

    Do the vast majority of Americans not realize that our current way of life is unsustainable? Our economy is a house of cards. We need to cut spending and increase saving on both individual and national levels. We need to restructure our economy so that it doesn’t depend on our destroying the earth for its survival.

    Of course, that will never happen. I’ll go back to my life of minimal consumerism and mind my own business now.

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